Muller Law Firm Explains the Importance of Documentation in Credit and Collection

BIRMINGHAM, Mich. - Dec. 6, 2023 - PRLog -- Do you keep thorough notes on your credit customers?

How often do you review credit information with your clients?

You can help keep the odds in your favor by insisting on good documentation throughout the credit and collection process. Good documentation begins with a credit application, which is required before your first sale on credit to any customer.

Review Credit Information for Existing Customers

Beyond requiring credit applications, you should periodically review credit information for all your customers. Depending on your industry and your history with the customer, you might review credit information every six months or once a year, but even with established customers, you don't want to go beyond a two-year review schedule. In between reviews, update your customer's credit data whenever you come across new relevant information.

You can avoid a lot of difficulties with defaults if you monitor your clients for changes in their business and financial health. For example, if you find out that a customer's business has new ownership, or that the owners have formed a new but similar company, it may be time to thoroughly recheck that customer. Sometimes your clients really don't want you to find out about changes, and that's a reason in and of itself to recheck them.

Interview New Customers and Keep Records

If a customer won't take the time to fill out a credit application, and you choose to extend credit to the customer anyway, you can protect yourself. Make sure you interview that customer to obtain the information you need to determine creditworthiness and to use as a resource if the customer's paying habits deteriorate. If you interview the customer by phone, keep a recording of the call (but be sure you can legally record the call under the laws of your state), or write the answers down on your standard credit application and add the completed document to the client's credit file.

Problems often arise when you act without enough information to accurately assess creditworthiness. If you enforce your credit policies and get the documents you need now, you avoid problems later.

Read this article on our website: https://www.mullerfirm.com/learnmore/documentation-in-col...

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About Muller Firm: Located in Birmingham, Michigan, Muller Firm P.C. is a family practice handling debt collection in Michigan for in-state, out of state, and international judgments against debtors. Their debt collection experts fight for creditor's rights no matter how big or small the amount of debt. Call today for help with your collections! www.mullerfirm.com